**North America**: A survey of 18 executives across diverse industries reveals companies grappling with tariff impacts, delays in capital investment, supply chain diversification, and limited reshoring in response to ongoing geopolitical trade tensions.
A recent series of interviews conducted by the Reshoring Institute with 18 C-level executives across North America has shed light on how businesses are navigating the challenges presented by ongoing tariffs, trade uncertainties, and geopolitical tensions. The discussion, reported in Supply Chain Management Review, involved executives from various regions including Upstate New York, New York City, Minneapolis, Toronto, Portland (Maine), Los Angeles, San Diego, and Silicon Valley. The industries represented were diverse, spanning semiconductors, machining, power generation, consumer electronics, audio equipment, medical devices, printing, fuel cells, and sports equipment.
The executives unanimously highlighted the significant impact uncertainty around tariffs—particularly those enacted since 2018—and economic conditions has had on business planning. Most noted that capital investments and hiring decisions have been largely frozen due to the unpredictable trade environment. One executive stressed the precariousness of large, long-term investments, stating that their company was unwilling to commit to constructing a new factory in the United States given the possibility of policy changes following a future presidential election. Consequently, production is likely to remain overseas or in Mexico for now.
Key insights from these interviews include:
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A vast majority (94%) of these companies depend on imports of finished or intermediate goods or spare parts, predominantly from China, but also from countries such as Mexico, Vietnam, Taiwan, and the Philippines. Even companies that claimed minimal direct importation acknowledged reliance on Chinese-made test equipment and production machinery.
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Companies are managing tariff costs through different approaches: many are passing increased expenses onto customers via higher prices, while a significant number absorb some or all of the tariff costs themselves. Respondents indicated that this approach applies both to tariffs introduced in 2018 and those more recently imposed.
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Around two-thirds (67%) of businesses are actively searching for or developing domestic suppliers to reduce reliance on foreign inputs. However, some executives conveyed that certain required parts are simply unavailable from U.S. manufacturers, necessitating continued imports.
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Smaller but notable numbers are using Foreign Trade Zones (FTZs) to defer tariff payments. This strategy, employed by 28% of respondents, allows companies to avoid paying higher duties temporarily but requires increased inventory investments, which affects working capital.
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The concept of reshoring production by building new factories in the U.S. was less common. More prevalent was the effort to find or develop existing domestic suppliers, as 78% of companies reported pursuing this option. Observers suggest that, if successful, this move could stimulate growth in domestic supplier manufacturing within the next 12 to 18 months.
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A significant minority (44%) said they are shifting production out of China to other countries offering lower manufacturing costs, such as India, Mexico, and Vietnam, rather than returning production to the United States.
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Some companies (22%) are exploring product redesigns aimed at reducing dependence on foreign components. While there was some scepticism about the feasibility of eliminating imported parts altogether, executives deemed it a strategy worth pursuing.
Overall, the executives described a cautious posture, largely waiting for tariff policies and the broader economic outlook to stabilise before making major moves. In the interim, businesses are crafting alternative strategies focused on supplier diversification and cost management to maintain operations amid ongoing trade tensions and tariff complications.
Source: Noah Wire Services
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